Intraday iron ore futures gained nearly 9% on the last trading day before the correction, and the contract closed the day with 6.83% growth. Overnight iron ore futures slowed gains and were up 2.78% as of today's close.
On the policy front, the central government frequently takes regulatory measures to curb iron ore prices:
On February 8, the National Development and Reform Commission and the General Administration of Market Supervision met with the relevant iron ore information organizations and demanded that no false price information or false price increase information be produced or published, and that speculation be strictly prohibited.
On February 11, the Price Department of the National Development and Reform Commission, General Administration of the Bureau of Market Regulation, Price Supervision and Competition, reported that it plans to send a joint research team to key ports to conduct some commodity exchanges, iron ore market surveillance and research in the immediate vicinity.
On February 15, the National Development and Reform Commission Price Department, the General Administration of Market Regulation Price Supervision and Competition Bureau, and the Securities and Futures Commission Futures Department held a joint meeting to remind and warn the relevant enterprises recently. He warned against hoarding, malicious speculation and inflating prices.
On February 17, the National Development and Reform Commission and the General Administration of Market Regulation went to Qingdao to conduct joint inspection and research of the iron ore market. He thoroughly studied the changes in iron ore stocks at the port of Qingdao. He held a special meeting with some iron ore trading companies to release stocks and bring prices to a reasonable level as soon as possible.
On February 23, the National Development and Reform Commission and the General Administration of Market Regulatory jointly held a special meeting to explore how to prevent iron ore hoarding.
On February 28, the price department of the National Development and Reform Commission, the finance and treasury department, and the price supervision and competition bureau of the General Administration of Market Regulation went to the Dalian Commodity Exchange to conduct joint research.
However, iron ore prices still managed to grow in the face of pressures, SMM believes the reasons are as follows:
First of all, the Russia-Ukraine conflict has been escalating lately and iron ore exports from these two countries are affected. In addition, mainstream steelmakers in the two countries have suspended steel supplies, which could increase China's exports of hot rolled coils and subsequently increase the demand for iron ore. As such, iron ore prices rose on the upbeat market mood.
In addition, shipments from Australia and Brazil were consistently low due to seasonal factors, particularly the rainstorm affecting iron ore transport in Brazil. Therefore, iron ore inflows to China have been low for a while.
Finally, production restrictions in Tangshan during the Winter Paralympic Games and Two Sessions were less than expected. The relevant authorities in Tangshan have issued detailed environmental protection measures for March 3-5, and only some sintering capacities with little impact on pig iron production have been suspended. Therefore, the long-term outlook for iron ore demand is still optimistic.
The current daily pig iron output of steelmakers in China is below 2.1 million metric tons and is unlikely to increase significantly due to the Winter Paralympic Games and the Two Sessions. Meanwhile, the port's iron ore inventory still stands at 150 million mt. In other words, iron ore is holding a weak upside momentum in light of ample supply and weak demand.
To sum up, SMM believes that iron ore prices may recover and are expected to remain at high levels recently due to high supply, weak demand and frequent regulatory interventions.
Comments
No comment yet.